Monday, October 4, 2010

LCR Change Timer --> LONG-CASH; Elder Timer = LONG

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Spent the weekend taking my entire family on a 12.3m hiking/overnight camping trip in the Shenandoahs.  While my older son Greg (age 11) and I just completed climbing Mt. Whitney a month ago and this weekend adventure is dwarfed in so may ways by that achievement, my younger son Sam (age 9) and wife have never done anything even remotely close to this and the bonds we reinforced as a family are that much stronger.  After 3,300' of climbing and descending I'm happy to say that we're sore, happy, and I think that they'll want to do this again sooner than later.  Here's the map; Google "shenandoah jeremy's run knob mountain" if you want to read up on what others have said about the adventure.  All I can say is that with the 5+" of rain that our area received last week, crossing Jeremy's Run 14 times was an interesting and wet experience.




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Let's begin with the dashboard:



As with all my images, right-click on the picture to view in another window or tab.

The GGT price index dropped an ever-so-slight amount on Friday, ending the week at $25.14, down -$0.02 from Thursday but still up when compared to the 1-week-ago price of $25.06 and the 2-week-ago price of $24.77.  We have had 2 days of "normal" volume, relative to the declining 50d MA on volume, with Thursday just 1% lower than the average, well within the noise.   Since Monday, 9/27, we have churned between $24.99 and Wednesday's peak of $25.20 on increasing volume, so my radar is peaked.

The GGT Long-Cash Ratio (LCR) fell slightly Friday, dropping -1.0% to 3.241.  This level indicates that there are 2285 stocks with some form of long recommendation and 705 stocks with some form of cash recommendation.  If you move across the figure you'll see that the LCR EMAs are all intact, with the 8d EMA > 13d, 13d > 21d, 21d > 34d, and the 34d > 55d.  We are clearly in an up trend and as far as this set of indicators are concerned, we have been since 9/13/10.

Although you can't see it in your figure above, I can also add that the SLOPES of these LCR EMAs are all pointing upward, from the 5d through the 65d, so again, we are clearly in an up trend and there is nothing indicating from the LCR sphere that we are losing ground. 

This being said, please ensure you read the Elder section below.

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Short Term LCR Change Timer

The short-term LCR Change Timer has transition to LONG-CASH (0).  What this means is that if today is a down day as far as the LCR is concerned, we will transition to CASH (-1) at the close of the markets, and that any short-term positions (e.g., VTI, QLD, UWM, etc.) should be exited.

I use the ADV/DEC line at http://www.finviz.com/ to make this determination around 3:30 pm, as I cannot update the LCR until Yahoo! gets their world updated after 10:00 pm.  If we are decisively in favor of DEC at this time (or later) I have found that it is prudent to protect profits on short-term holdings.

I am presently holding VTI, and unfortunately my position is underwater by -0.19% going into the market open Monday morning.  I will try to close even on this, as I think the likelihood of going up a significant amount is less than it moving down.  I note with interest that the VTI timer, which is derived completely from the LCR Change Timer, has been in CASH since 9/23.  $58.92 is my break-even bogey.

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Intermediate-Term Elder Force Index Timer

Overall, I am holding a number of equities because this timer is indicating long, as determined by the absolute value of the 13d Force Index of the GGT stock database.  I note the following:
  • the Elder 13d Force Index EMA is positive (column 12).  While you can't see the value, it is 79K.  The maximum value ever attained (since 1/2/09) is 632K.
  • the Elder 13d FI EMA SLOPE is pointing downward, and this is bearish (column 13).  It has been doing so for three consecutive days.  When this has occurred in the past, and when it moves to 4+ days, you can hear the coffin being nailed shut.
  • the 13d pricing slope is positive (column 14), as is the 34d pricing slope (column 15).  This is bullish in general.  What you cannot see in the figure, but I can, is that the "slope of the slope" is pointing downward, e.g., the "car is moving forward but it is slowing".  We are losing momentum.
Given these warning signs, and the fact that futures are down while I write this, we need to pay attention.

Time to Prune:
  • Unrealized gains in the Elder portfolio are +1.45%.
  • ENTR has moved to a negative 13d EMA on the FI and will be sold with a 1% TSL
  • INAP is in danger of the slope of the 13d EMA crossing the slope of the 34d EMA from above, as well as both of these moving negative, so I will watch this one carefully.
  • As goes INAP, so it is for EFA, SPY, EWN, IGN, PFM, and the VTI.  Any weakness in these today could be a cause for me to dump ... we'll see.
Stock & ETF Candidates for Monday:  None

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Trading Plan for Monday

I will close my VTI position if it hits my break even level, or if by 3:30 the ADV/DEC line is decidedly in favor of the bears.

I do not intend to purchase any intermediate-term stocks today.  I will watch for weakness in the list as provided above, and will remove these from the portfolio if they begin to break down in a rapid manner.

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Remember, you are responsible for your own trading decisions, not me.  Please take ownership for your trading decisions.

Regards,

pgd